Preparing Your Supply Chain for the Coming War with China: Part One - Why the War is Coming Soon

Anthony G. Tarantino, PhD

Smart Manufacturing, Supply Chain, and Continuous Improvement Senior Consultant

Published Oct 17, 2024

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CONTINUOUS IMPROVEMENT WITH TONY

NEWSLETTER, VOLUME 17, OCTOBER 16, 2024

Anthony Tarantino, PhD

Preparing Your Supply Chain for the Coming War with China

Part One: Why War Is Coming Soon

In their 2022 book, Danger Zone, The Coming Conflict with China, Hal Brands and Michael Beckly make a compelling case for why the coming war over Taiwan will come sooner than later. [2] They begin by offering a scenario in which the contested results of the 2024 election would be an ideal time to strike. (They assumed at the time that it would be a Biden/Trump rematch.) Most analysts do see an eventual war over Taiwan by 2049, the hundredth anniversary of the Chinese Communist Party takeover of the mainland. Brands and Beckly argue that the war will come much sooner because China has been hiding a long-term economic decline and cannot afford to wait too many more years.

Before starting a career in manufacturing supply chains and continuous improvement, I studied China starting in middle school and through a PhD dissertation at the University of California. So, I have a keen interest in China’s economic and political relationships with the West, especially with their main adversary, the United States.

I have watched with concern how Xi Jinping, General Secretary of the Chinese Communist Party, has rejected the market reforms of Deng Xiaoping, the influential leader of China from 1978 until his death in 1997. Deng is best known for initiating the "Reform and Opening-Up" policy, which transformed China's economy from a centrally planned one to a more market-oriented one.[3] These reformed saved China from the same fate as the Soviet Union in which central planning and massive corruption created an economy that could not compete with market-driven democracies.

Xi Jinping is ruling China following the philosophy of Mao Zedong and Russia’s Joseph Stalin which dictates that holding power is the primary objective even at the expense of massive human suffering and economic ruin. Mao’s Great Proletarian Cultural Revolution, which lasted from 1966 to 1976, had a profound negative economic impact on China with industrial production dropping 12% in two years and the death of an estimated one to three million people.[4] Millions more were tortured and imprisoned. The persecution of scientists and other professionals set back economic development and innovation for a decade.

Now that we have laid the foundation for the coming war, the pressing issue for western supply chains is how to prepare for what will inevitably be a disruption rivaling the Covid-19 pandemic. China accounts for about 30% of global manufacturing output making it the world's largest manufacturer, significantly ahead of other countries.[5] The US ranks second at about 17%, followed by Japan at 8%, and Germany at 5%.

If you do not import goods from China and believe this does not affect you, you are mistaken. Even if you do not buy directly from China, it is almost guaranteed that some of your tier one and tier two suppliers do so. If you do import goods from China, you face a nightmare scenario – your imported goods arrive at the Port of Long Beach at the same time as the arrival of the bodies of the first US military personnel killed fighting over Taiwan.

The second newsletter in this series will provide the process to run a risk assessment of your supply chain exposure. The third newsletter will focus on developing multi-tiered supply chain visibility offering tools that even smaller organizations can utilize.

Please provide your thoughts and suggestions on this critical issue.

Prediction

Most military analysts predict a carefully planned attack by China against Taiwan and the US. History has taught us that many wars start by way of accidents and major mistakes, for example, the nonexistent weapons of mass destruction as an excuse to invade Iraq, and the combination of miscommunication and miscalculation that led to World War One resulting in 40 million deaths.

During the recent Joint Sword-2024B exercise, large numbers of Chinese vessels and aircraft approached the Taiwanese coast engaging in drills focusing on combat patrol, blockades on key ports and areas, as well as assault on sea and land targets, testing joint operations capabilities. Last week a Chinese maritime militia vessel intentionally sideswiped a Philippine Bureau of Fisheries vessel near Thitu Island, over 700 miles from the Chinese coast.[6]

All it will take is one mishap in which a Chinese hotshot fighter pilot or warship commander harasses US military assets to the point that the shooting starts. This could happen at any time.

Cheers, Tony

Anthony Tarantino, PhD